The appraisal industry originated from a need to valuate real property, such as surrounding the sale or insurance of a home, building or other improvement to land. The traditional process, as shown in FIG. 1, involved an individual called an appraiser 14, whose assignment it was to attribute a value to a piece of property, while possibly verifying the characteristics of that property in the process. To perform this function the appraiser 14 would receive a description of property 12, minimally identifying the property to appraise the value of, but preferably also describing the attributes of the property such as the type, area, style, etc. Property description 12 might also include an inspection report. Property description 12 might also be a simple appraisal order containing an identification of a property, such as an address. Before the widespread use of computers and networking, the appraiser 14 would ordinarily consult real estate records 11, whose usual location was at the county land records office. Records 11 would contain descriptions and amounts of the sale of properties within a given locality, which appraiser 14 could compare against a property description 12 to assign a value. Appraiser would identify properties within records 11 that were comparatively close to property description 12, resulting in the identification of “comparables”. Upon a sufficient number of comparables, appraiser 14 would attribute a value to the property of property description 12, and release an appraisal report 15 for the requesting party.
In can be appreciated that the appraisers of yesterday spent a significant amount of time in the land records office finding comparables, which was inconvenient. Therefore, it was known to keep a collection of files 13 which the appraiser could refer to to reduce his workload and time in finding comparable properties. Other files might also be consulted, including property inspection reports. However, the appraiser 14 was still required to visit records 11 to update his knowledge of sale values, with fluctuations in the market and the devaluation of currency due to inflation.
The technology of appraisals has improved over the years, such that it is no longer necessary to visit the land records office, nor to keep extensive on-site files containing comparables. However, a desirable appraisal may need to consult with a number of data sources, which are now described.
The traditional source of public records remains available to the appraiser. Unfortunately, the history of these public records varies from locality to locality, such that there is no unified repository that can be consulted. In many cases, these public records are managed at the county level. Often there is one office that may be consulted housing the land records of the county, where transactions may be recorded. Even if that is so, however, many records regarding land may be located elsewhere. There may be a county recorder office charged to “record” all information in the public records requested or required by the general public, including property owners, lenders, court systems, etc. Appraisal-related information obtained from this office typically includes legal descriptions of each individual property parcel in its county, plat maps showing those parcels, and information regarding ownership and interest therein. Recorded in this office may also be information regarding transactions regarding land, such as prices paid.
There may also be other county offices that an appraiser might consult. One of these might be a county assessors office, which is typically tasked with keeping informational records on the land parcels in the county, which information might include an address, the year a structure was built, and various physical characteristics of land and buildings. This office is also typically tasked with periodically estimating a value for parcels, usually annually, which might be of interest when conducting an appraisal. This need not be the only office of this kind: in Texas, for example, there are “valuation districts” that are located within larger county jurisdictions that serve the same function. Other county offices that might manage information useful in the performance of an appraisal might include a county treasurer office, often calculating property values in the collection of property taxes, or other offices that perform land planning, building, zoning, auditing, engineering, surveying, or the management of other records regarding health, public safety, and technological improvements such as for communications.
At the city level, records of interest in appraisal are also kept. These typically involve building codes, zoning histories, subdivision approvals, and building and land development rules, regulations and policies, all of which are managed by each individual city. Many cities have various engineering policies, procedures and documentations that govern or affect the development and general use of real property. As well as written records, there may be various kinds of maps to be consulted. Cities also keep records specific to properties concerning actions, permissions and permits granted or denied. For example, these might include building permits and related documentation, inspection records, and zoning authorizations and history records. It is not uncommon for medium or larger cities to have their own technology department to manage their various public records. In those places with townships, that can also increase the locations where appraisal-important information may be found.
Real-estate related information may be also be found at the state level. This can involve taxing commissions, departments of transportation, health, economic development, agricultural departments and census bodies.
Last mentioned herein are federal offices that manage information that might affect the appraisal of a property, including offices related to census records, health, transportation, lending and financial concerns, the IRS, agriculture, interior and the military.
There are available to real-estate agents a Multiple Listing Service (MLS), which allows such agents to enter information about specific properties that are offered for sale to the public. Such services may also keep information about properties that have sold, are currently under contract, or for which contracts have expired. Systems supporting MLSs have become the backbone of the real estate industry and are used heavily, utilizing electronic platforms that are generally large and sophisticated. Real estate appraisers have been allowed essentially read-access to the data contained in these MLSs. Although these do provide information useful in the performance of appraisals, these are restricted in their locality both geographically and by organization, as it is local boards of realtors that ordinarily own or otherwise participate in correspondingly local or at most regional MLSs. At the present time, there are some 700 to 900 local MLSs around the country. Each MLS is typically well established, having its own rules, processes and databases. There are standards for these promulgated by the National Association of Realtors, but the degree and level of compliance varies. Each system has its uniqueness, with different data structures and data elements that reflect the local or regional characteristics of the properties described. While most of these system have export capabilities, these have their limitations in extractions, formats and presentations to appraisers, who ordinarily find that much of the information received requires further manual processing.
Appraisers also have available to the commercial data service companies, which use their own proprietary platforms, database constructions and delivery systems. For example, such a company might purchase data from public records, MLS data, individual appraisers and other sources, merge it, combine it, repackage it and then resell it in a large block of data. Appraisers have made use of these services, although the information has been organized in such a proprietary nature that appraisers have found manual refinements to be required. Some appraisers have attempted to organize their own services in a local or regional co-op, but these have not solved the problems with non-standardizations of data formats.
The final source to be mentioned that an appraiser might rely upon is his own files. In the process of completing appraisals, appraisers typically keep data on the subject properties. This data source is usually kept in databases and file structures unique to the individual software package purchased from one of the five or six supplying vendors. The data in an appraisers file may or may not have been manipulated to meet personal style or structure, and cannot be relied upon without familiarity of this source by the appraiser desiring use of it.